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NEW YORK — It’s a new year, so once again it’s time to take “Dogs of the Dow” out for a run.

This annual Wall Street strategy has investors kick off January by buying the 10
highest-yielding stocks in the Dow Jones industrial average and hold them for the rest of the
year.

Yield is the annual dividend from a company divided by its stock price. The higher yields of the
“Dogs” signal that their stock prices have declined the most among the Dow’s 30 blue-chip
companies.

The goal of the strategy is to earn more dividend income and hope that the stocks also mount a
comeback.

If a company’s stock price is $1 and it pays a dividend of 5 cents to shareholders, the yield is
5 percent. Yields are attractive to some investors because companies will rarely cut their dividend
payout to shareholders, except under extreme circumstances.

This year’s “Dogs” are a lot like the ones from 2013.

In the top spot is AT&T, which has a dividend yield of around 5.2 percent, followed by
Verizon Communications, which has a yield of 4.3 percent. Both Verizon and AT&T held the No. 1
and No. 2 spots, respectively, going into 2013 last January.

Rounding out the top 10 “Dogs of the Dow” are Merck, Intel, Pfizer, McDonald’s, Chevron, General
Electric, Cisco and Microsoft. Collectively, 2014’s “Dogs” have a dividend yield of around 4
percent.

As a strategy, the “Dogs” has been relatively consistent, but the amount of the consistency has
varied.

The “Dogs” did outperform the rest of the blue chips in 2013. A portfolio of the 10 “Dogs” last
year would have risen roughly 33 percent, before dividends, versus the

26.5 percent increase for the entire index.

But last year’s performance was distorted by one stock: Hewlett-Packard. In many ways, HP was
the dog of all “Dogs.” After the stock had fallen for three straight years, it jumped 96 percent in
2013, making it the best-performing “Dog” of 2013. In September, it was pulled from the Dow, but HP
was still considered a Dow “Dog” because it was in the index on Jan. 1. Without HP’s gains, the “
Dogs” would have slightly underperformed the Dow.

The “Dogs” strategy worked in 2012 and 2011 as well, according to research firm Bespoke
Investment Group.